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New York Issues First Recreational Dispensary Licenses and Approves Proposed Adult-Use Cannabis Regulations

On November 21, 2022, the New York State Cannabis Control Board (Board) approved 36 provisional Conditional Adult-Use Retail Dispensary (CAURD) licenses. The Board also approved the Office of Cannabis Management’s (OCM) proposed Adult-Use Cannabis Regulations.

The 36 provisional licensees, selected from a pool of 903 CAURD applicants, include 28 entities controlled by Justice Involved Individuals and eight non-profit organizations. They will be among the first businesses to legally sell recreational cannabis in the state.

The Marihuana Regulation and Taxation Act (MRTA) requires that the first 175 licensees for Adult-Use Retail Dispensaries (Retail Dispensaries) be CAURD applicants. The Board must approve 139 additional CAURD applicants, including 17 qualifying non-profit organizations, to meet this requirement before issuing non-CAURD Retail licenses.

While the 36 provisional licensees represent the highest-scoring CAURD applicants, it is unclear when the Board will be able to complete the CAURD licensure process. A federal judge recently issued a preliminary injunction preventing OCM from issuing licenses in five of the 14 regions designated for CAURD licensees, including Brooklyn, Mid-Hudson, Central NY, Western NY, and the Finger Lakes. The primary injunction impacts 63 potential CAURD licenses.

The proposed regulations include the rules for seven different license types, including Cultivation, Nursery, Processing, Distribution, Retail Dispensary, Microbusiness, and Cannabis Collective (Co-op). Notably missing are regulations for Delivery and On-site Consumption, which the OCM stated will be issued in a future round of regulations. However, it does appear that on-site consumption will be permitted in approved Retail Dispensaries.

The regulations also confirm that New York’s two-tiered market structure, which separates the supply tier (cultivation, processing, distribution) from the retail tier and prohibits individuals from having an interest across tiers, applies internationally and not merely within New York State. Accordingly, an individual who operates or invests in a supply tier cannabis business anywhere in the world cannot have any interest in a New York Retail Dispensary.

In addition to establishing the allowable activity for each license type, the regulations put in place the application criteria and licensing fees, enforcement rules, operating requirements, municipal authority, criteria for social and economic equity applicants, and requirements for Registered Organizations (medical cannabis operators) to be able to open Retail Dispensaries.

The proposed regulations are open to a 60-day public comment period before they can be promulgated. Comments can be submitted to the OCM via email at regulations@ocm.ny.gov.

Stay tuned to the Prince Lobel Cannabis Team Client Alerts for a comprehensive summary of the proposed regulations in the coming days. In the meantime, if you have any questions about the proposed regulations or are interested in obtaining one of the seven cannabis license types available in New York, please contact James K. Landau, David Holland, Andrew Schriever, or any other member of the Prince Lobel Cannabis Team.

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